Cause and effect: it is highly inadvisable to set performance objectives and then let the measures take care of themselves. Mike Bourne and Andy Neely show how easily dysfunctional behaviour can result from a lack of forethought.
| Author | Bourne, Mike |
| Position | Management: balanced scorecard - Brief Article |
Books and articles on the balanced scorecard and performance measurement usually describe how firms set key business objectives, but most of them don't explain how to design the performance measures themselves. This is the missing link in scorecard deployment.
Consider the following case as an example of underperformance when it comes to defining performance measures. When an airline became concerned that a crucial aspect of customer satisfaction concerned how quickly the passengers retrieved their luggage after landing, it set an objective to improve baggage delivery and introduced a new performance measure. The day after this was introduced, senior managers watched in astonishment as one of the teams of baggage handlers unloaded the cases from an incoming flight.
Initially, the team members stood chatting together as they waited for the tractor to bring the baggage trucks from the aircraft. When it arrived, the team leader grabbed one small bag and threw it to the youngest member of the team. The youth caught the bag and sprinted across the tarmac with it. He reached the conveyor belt, threw on the bag, hit the start button and then sauntered back to the group. None of the others had moved. They continued chatting for several more minutes before eventually starting to unload the rest of the bags.
Inappropriate behaviour resulting from a poorly defined performance measure is something that happens all too often. The measure had been defined as the time taken for the first bag to hit the conveyor after the aircraft had landed. This was what the baggage handlers had minimised, but it wasn't what the customers and the company actually wanted.
A lot of performance measurement problems stem from a lack of attention to detail at the definition stage, but they can be easily overcome. The performance measure record sheet is a useful tool to help you do this. This template for recording definitions is designed to make you consider why an aspect of performance is being measured and think about the link between the measure and the objective your business is trying to achieve (see figure 1, below). When reviewing the completed performance measurement record sheets there are two questions to ask:
* What kind of behaviour will result from the implementation of this measure?
* Will this behaviour be desirable?
If you work through the record sheet consistently with a small team of colleagues, many of the unexpected problems of implementing new performance...
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